Boeing After Earnings: 777X delayed yet again

Boeing is one of the largest aerospace and defense corporations in the world. The company designs and manufactures passenger and military aircraft, and also provides service and technical support to operators worldwide.

The latest report disappointed investors, but without signs of a sentiment collapse. The improvement in results is worse than expected, but does not indicate a loss of operational capabilities. The pace remains uneven, yet the production fundamentals and order portfolio provide grounds for cautious and moderate optimism.

The biggest, and negative, attention was drawn by a $4.9 billion loss related to the delay of the 777X aircraft program.
This is the sixth schedule shift, and the total project cost has exceeded $11 billion. The company's CEO emphasized that there is still a lot of work to be done with regulatory bodies before the design receives full flight approval and enters serial production. This is negative information, but it is evident that the company is learning from a series of high-profile failures that Boeing's machines have been victims of in recent years.
Another blow to already low investor confidence is the prolonged strike at the plants manufacturing fighter jets in Missouri and Illinois. These plants are responsible, among other things, for the production and maintenance of F-15 and F/A 18 platforms. This is particularly concerning, considering that defense activities account for about one-third of the company's revenues, and its strategic role for the United States Department of Defense is a significant reason why the company remains in the market despite years of erroneous decisions and serious controversies.

Not all news is negative, however.

• The company has stabilized production in the 737 family and is moving towards achieving the goal of producing 47-52 machines per month.
• The order portfolio is also clearly growing. It now includes a total of 5,900, with 821 added just this year.
• Profitability has also improved. The commercial aircraft segment increased margins year-over-year by 49%.
• Meanwhile, the defense segment increased revenues by 25%, achieving a profit of $114 million.

The company continues to struggle with engineering, financial, legal, personnel, and strategic issues. Despite this, the trend in results, which are still disappointing, indicates a slow improvement in the company's condition.

BA.US (D1)

Source: xStation5